Gov. Jerry Brown of California on Monday signed a bill that protects homeowners whose property may be underinsured.
AB 1797 by Assemblyman Marc Levine, D-Marin County, requires companies writing residential property insurance to conduct a replacement cost estimate every other year. The legislation will ensure policyholders are covered with current and timely estimates that reflect their property’s value.
Many survivors of the recent wildfires were underinsured due to inaccurate or outdated replacement cost models used by insurers, Levine said.
“After facing the most destructive wildfires in state history, Californians should not have to begin the recovery process underinsured,” Levine said.
Insurance Commissioner Dave Jones said Levine’s bill strengthens consumer protections and aims to address critical issues facing wildfire survivors.
“But it’s disappointing that some insurers got the original version of the bill amended so that it no longer requires insurers to provide an annual replacement cost estimate,” Jones said.
Current regulations require a complete and comprehensive estimate of the cost to replace a home when the insurer provides a replacement estimate, but state law does not mandate that insurers produce or regularly update a replacement cost calculation, Jones said.
AB 1797 will require insurers to either provide a policyholder with a full replacement cost estimate every other year or apply an inflation factor to the dwelling limit at each renewal and clearly offer the consumer the option to obtain a full replacement cost estimate, Jones said.
The bill takes effect July 1, 2019.